How East Africa CEOs perceive business, economic growth

Mr Alex Njombe, Partner and Country Leader at KPMG Tanzania. PHOTO | COURTESY

What you need to know:

  • While 80 percent of CEOs had confidence in their companies’ growth prospects in 2022, that number has since decreased to 70 percent in 2023.

Dar es Salaam. Chief executive officers (CEOs) in East Africa are largely optimistic about domestic and global economic growth.

They have, however, identified regulatory risks as the primary threat to their organisations’ growth prospects in the next three years.

This is according to the ninth edition of the KPMG East Africa CEO Outlook, which involved 50 CEOs in Tanzania, Kenya, Uganda, Rwanda and Ethiopia.

According to the report, regulatory risks are in contrast to previous years when CEOs viewed emerging technologies as the main threat.

While CEOs are confident in economic growth prospects, this is not the case as far are their companies’ growth is concerned.

According to the report, while 80 percent had confidence in their companies’ growth prospects in 2022, that number has since decreased to 70 percent this year.

“With confidence, East Africa CEOs expect to exploit the economic growth, with 92 percent of them expecting their companies to grow by at least five percent over the next three years. However only two percent expect to grow by more than five percent,” the report says in part.

Other risks for organisations’ growth were political uncertainties, rising interest rates, climate change, and operational risks and technological factors.

Speaking during the report’s launch yesterday, KPMG Tanzania Partner Alexander Njombe said CEOs specified that these risk areas are the areas where they need to navigate and incorporate in their business strategies going forward.

“Another issue of talent where the CEOs majority have agreed to improve capital investments in developing our workplace’s skills and capabilities and they still see hybrid working as relevant,” he said.

East African CEOs have indicated that advancing digitisation and connectivity of all the functional areas in the organisation will be the top operational priority to achieve growth objectives over the next three years.

CEOs are placing their capital investments both in technology (36 percent) and in developing their workforce skills and capabilities (64 percent).

On that note, 72 percent of CEOs in East Africa ranked investment in generative Artificial Intelligence as a top investment priority for their organisations.

Tigo’s Chief Officer for Mobile Financial Services, Ms Angelica Pesha, said AI provides a growth opportunity for local institutions however adequate investment is needed to ensure growth aligns with the changing pace of technology.

“For the case of my company, we have been able to identify and create individualised products that cater to customer’s needs, improved network, and FastTrack accessibility,” she said.

From the survey, environmental and climate change risks were named among the top three risks to growth among East Africa CEOs.

However, CEO Roundtable of Tanzania (CEOrt) Executive Director Santina Benson said commitment to sustainability was still lagging.

“However, currently when investors are looking at who and where to invest in one of the key issues that they are looking at are environmental, social, and governance, so interestingly the narrative now is starting to shift,” she said.

In the KPMG report, it was stated that while global corporations are making their own pledges to achieve net-zero emissions East Africa CEOs see lack of skills and expertise to implement solutions as key barrier to do the same.